Have you found a home that you love and want to purchase? The dream home that you’ve always wanted may be in front of you, the design looks beautiful, and it meets your requirement to be an ideal home. However, it needs renovations and you don’t have the finances. To fix this home, you need financial support. A loan for a home renovation would be beneficial for first time home buyers. This is where a 203k Rehab Mortgage Loan can help. This loan program turns your dream into a reality.
203k Rehab Loan For First Time Home Buyers
What is a 203k Rehab Mortgage Loan?
An FHA 203k rehab loan allows a first time home buyer to borrow money for purchasing a home and its improvement. An FHA 203k rehab loan is a loan backed by the Federal Housing Administration and funded by 203k mortgage lenders.
Repairs That Qualify
There are two types of FHA 203k mortgage loans:
- Streamlined 203k
- Standard 203k
FHA 203k streamline loans are for energy conservation improvements, new roofing, new appliances, or non-structural repairs such as painting.
Some of the repairs that an FHA 203k loan covers include:
- Remodel of bathrooms and kitchens
- Heating and air conditioning systems
How a 203k Rehab Loan is Helpful For First Time Home Buyers
An FHA 203k Rehab Loan helps a first-time homebuyer purchase, refinance, and repair a home that needs to be fixed up before it can be occupied. Some of the benefits of an FHA 203k loan:
- An appraisal is based on the after-improved value of the home
- Low credit scores
- Specially designed for fixer upper
Requirements for a 203k Rehab Home Loan
In order to qualify for an FHA 203k Rehab Mortgage Loan, a first time home buyer must meet certain requirements outlined by the Department of Housing and Urban Development (HUD). These requirements include finding a house that needs renovations, finding a qualified lender, and meeting the lender’s requirements, which include minimum credit scores, debt-to-income ratios, and proof of income. Once your loan is approved, a date will be fixed for closing. The home repairs must start within 30 days of closing and should be completed within six months.